Construction Loans

Main Street Mortgage Company maintains relationships with several underwriters to ffer a variety of construction financing options for you to build your new home.

Construction financing is limited to the Houston, Texas market and its surrounding counties.

We are pleased to offer both Stand Alone Construction Loans and One-Time Close Construction-Permanent Loans to our clients.

One-Time Close Construction-Permanent Loans (OTC)
  • Often called a Mini-Perm Loan
  • Facilitates both the construction financing and the permanent mortgage
  • During the construction period, borrower makes interest only payments based upon the outstanding balance and the note interest rate.
  • Upon completion of the home the loan MODIFIES into a permanent mortgage where the borrower makes monthly payments of principal and interest based upon the note rate and remaining term of the loan.
  • The permanent mortgage can be structured as a fixed rate mortgage, long term adjustable rate mortgage or a short term adjustable rate mortgage
  • Advantage:  borrower knows both the Construction Rate and Permanent Rate up front, no re-approval or re-appraisal to obtain the permanent mortgage
  • Disadvantage:  locked into the permanent mortgage up front with fewer long term mortgage options

Stand Alone Construction Loan
- Provides short term financing to build the home (generally terms of 9-12 months)
- Maximum loan amount based upon the lesser of the total "hard" cost and appraised value.  Total Hard Cost = Lot Cost + Construction Cost
- Maximum financing amount will depend upon the loan amount.  Up to 90% may be possible subject to qualification.  However, 80% financing is the most common structure
- Funds are disbursed according to the work schedule (draw schedule) and based upon the work completed.  Most construction loans will have approximately 9 Draws made over the term of the loan.
- Construction Rate will be determined out of underwriting the borrower's credit package
- Upon completion of the home, Main Street Mortgage can arrange a permanent mortgage using a Refinance Transaction
- Advantage:  lower transaction costs, more options on the permanent mortgage
- Disadvantage:  requires a separate closing for the permanent mortgage, subject to interest rate risk and appraisal risk